IDC Expects Worldwide Telecom Services Market Growth to Slow Due to Uncertainty

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Worldwide spending on telecom services and pay TV services reached $1,510 billion in 2024, reflecting a 2.2% year-on-year increase, according to the Worldwide Semiannual Telecom Services Tracker published by International Data Corporation (IDC). In comparison, IDC expects worldwide spending on telecom and pay TV services to increase by only 1.6% next year, reaching a total of $1,535 billion.

In 2024, the global telecom services market recorded accelerated growth, a notable shift from the previous year. This surge was primarily driven by inflation, which triggered the increase of tariffs and compelled both residential and business customers to allocate more funds to telecommunications services. The impact of inflation was particularly pronounced in Europe and North America, where higher purchasing power resulted in lower pricing elasticity — i.e., fewer clients in these regions opted to switch to more affordable packages or discontinue services they deemed non-essential. Conversely, the Asia Pacific region saw a slower growth rate compared to the previous year, largely due to the robust post-COVID recovery observed in 2022 and 2023.

Our latest forecast for the telecom services market is slightly less optimistic compared to the version published in November last year, projecting slower growth in 2025 by 0.9 of a percentage point. As inflation has gradually weakened in most countries, its impact on telecom services spending is expected to diminish. Simultaneously, the telecommunications industry is undergoing significant technological transformation, aimed at increased productivity and higher competition. AI is enhancing customer experience and operational efficiency for service providers. Investments in 5G infrastructure are accelerating, with a focus on network densification and strategic partnerships to expand coverage. The rollout of fiber optic networks and Low Earth Orbit (LEO) satellite services is fostering competition and driving advancements in connectivity. Additionally, telecom operators are increasingly shifting their focus from traditional connectivity services to digital services, leveraging cloud-native technologies, AI, and edge computing to deliver innovative solutions.

A significant factor that could influence the market landscape includes the tariffs announced and partially imposed by the new U.S. administration. While the direct impact on the telecom services market is expected to be minimal, given that these services are domestic, essential, and recurring expenditures, the indirect effects could be more pronounced. According to Mark Walker, vice-president, Worldwide Telecoms Data and Analytics at IDC, "Tariffs on telecommunications equipment might lead to increased costs for telecom operators, potentially delaying 5G rollouts and AI projects; although, in the longer term, potential downsides may include further economic deterioration and reduced purchasing power due to a new wave of inflation.” However, since IDC's baseline scenario includes only the tariffs that were in effect as of April and excludes those that have been postponed, this remains just one of the possible outcomes. IDC's forecast accounts for a significant degree of uncertainty, which is reflected in the lower GDP outlook; nonetheless, the baseline scenario still presumes that a global recession will be avoided.